How Victoria's economic development works

Victoria approved a sales tax to create an Economic Development Corporation in 1996.

Victoria's available funds are focused primarily on infrastructure, said Victoria City Attorney Thomas Gwosdz, because businesses are more likely to relocate to a place with power, water and sewer lines and good streets ready to meet their needs.

For example, of the $13.9 million available sales tax revenue for 2013-14, the city is projecting to spend about $6 million on utilities and about $820,000 on streets and sidewalks.

The Victoria Sales Tax Development Corp. also gives about $380,000 each year from its fund to the Victoria Economic Development Corp., a private, not-for-profit organization that has existed in Victoria since 1982.

The Victoria Economic Development Corp. markets Victoria to primary jobs creators such as Caterpillar and uses a combination of private and public money to operate.

Dale Fowler, president of the Victoria Economic Development Corp., had a study commissioned on the economic impacts of the corporation in 2012.

"It is important, I believe, for a community that invests in economic development to understand what the return on that investment is. And it shouldn't be zero," Fowler said.

The study, performed by Impact DataSource, showed that Fowler's group brought in 1,316 jobs directly to Victoria and 1,759 indirect or induced jobs to Victoria between 2003-12.

The corporation focuses on primary jobs because they create additional sales and property tax revenue and create spinoff jobs.

The Victoria's Sales Tax Development Corp. also offers incentives to businesses. For example, the Victoria Sales Tax Development Corp., with approval from City Council, granted Caterpillar about 320 acres of land to build the plant and granted up to $2 million for infrastructure improvements.

However, the company is required to create at least 500 full-time positions through December 2021 and has other stipulations in the contract. If it does not follow through with the contract, the city can take action against the company.

And for the $2 million in infrastructure, the city is reimbursing Caterpillar as city officials receive invoices.

"In my legal opinion, it is perfectly acceptable to give cash up front, provided there are acceptable accountability measures in place" and provisions requiring the return of the money if it does not perform as outlined in the contract, Gwosdz said.

The "Victoria method" is to give the money after the businesses already have provided some form of economic development to the city, he said.